Friday, July 20, 2012

My good friend Carter Wrenn, longtime political operative, thinker, and trouble-maker, has an interesting view on the current money race in NC.

First, let me show you this. It may be hard to understand, but Bev Perdue outspent Pat McCrory by a truly huge margin. None of our local media objected, because that was how it was supposed to be. Everyone knows that Dems are more popular...

The Democrats’ treasure chest has vanished. Year after year in
elections, Democrats like Jim Hunt and Marc Basnight had war chests brimming
with cash. Bev Perdue defeated Pat McCrory last election by outspending him by
$7 million. But now the Democrats’ larder is empty. Phil Berger’s outraising
Martin Nesbit (Basnight’s Senate heir) seventeen to one and Pat McCrory raised a
million dollars more than Walter Dalton last quarter.

So, for Democrats, what went wrong?

The answer, I think, is that the Dem machine in NC was so corrupt that, once out of power, there was very little actual support for the candidates or the policies. The Dems lived off theft for more than a century.

Now, to be sure, it is not clear that the Repubs will do anything different... To be fair, the Dems never claimed that they were going to do anything else. They took money from people who earned it, and gave the money to their friends, whooping and squealing about "the poor! the poor!" in the meantime. The Repubs say they are going to cut, and then they just end up TAKING their cut.

A group of homeowners recognize that they spend too much time, which might be better spent sleeping or working, patrolling and defending the boundaries of their fields and pastures. So they commission a pack of dogs, large fierce dogs, to carry out this rather simple function on their behalf.

The dogs are perhaps smelly, and noisy, and not too bright, but they are quite capable of carrying out the limited function envisioned for them by the homeowners: bark loudly at intruders near the border to warn them off, and bite anyone who actually crosses the border.

The landowners selectively breed the dog pack over time, and the dogs develop rudimentary speech abilities, and opposable thumbs. The dogs are now able to carry out their function at a very high level, conducting night surveillance of property and defending that property against anyone without authorization. In fact, this dog pack is the best, the smartest, and the most dangerous dog pack the world has ever known. The citizens feel very secure.

One day, a homeowner returns to his house and finds the dogs sitting on his couch, eating his food, and watching his television. Outraged, he confronts them: “How dare you violate my property, which you are supposed to protect?”

The head dog is utterly unashamed. In fact, he says, "You didn't earn this house."

The dog points out that the only reason that the homeowner is able to leave his house to work and earn money is that the dogs protect the house. Thus, in the dog’s view, the dogs have a better claim to ownership than the putative “owner,” because without the dogs there would be no ownership, no roads, no businesses. The dog says it again: "You didn't create that business, you didn't earn this house."

Abstract:
Traffic safety mandates are typically designed to reduce the harmful
externalities of risky behaviors. We consider whether motorcycle helmet
laws also reduce a beneficial externality by decreasing the supply of
viable organ donors. Our central estimates show that organ donations
resulting from fatal motor vehicle accidents increase by 10 percent when
states repeal helmet laws. Two features of this association suggest
that it is causal: first, nearly all of it is concentrated among men,
who account for over 90 percent of all motorcyclist deaths, and second,
helmet laws are unrelated to the supply of donors who die in
circumstances other than motor vehicle accidents. The estimates imply
that every death of a helmetless motorcyclist prevents or delays as many
as .33 death among individuals on organ transplant waiting lists.

I would expect deaths to go up, and total accidents to go down slightly, after a helmet law is repealed. People would be slightly less willing to take risks, but if there is an accident it is more likely to result in death.

Thursday, July 19, 2012

1. Ex TSA agent shows TSA supervisor what was done to her. TSA supervisor starts crying presses charges. Citizen is put in jail for assault. One of the most common libertarian complaints is so many violent felonies are called "policies" if perpetrated by someone who works for the government.

2. Telecom dares challenge the Great and Powerful Oz. G&PO claims it NEVER needs a warrant. Obama and co. are a disaster on basic civil liberties. The president can kill citizens and search private records (and parts; see above!) with absolutely zero due process. My lefty friends constantly say "He's no worse than Bush." That's true, I suppose. But he's also no BETTER. Because he's NO DIFFERENT.

3. This op-ed is amazing. I often am sympathetic to Stuart Taylor and KC Johnson in their anti-Duke screeds; it's true that the lacrosse case was appalling. But you'd have to be an idiot not to understand the problem of type I and type II error here. Duke was over-zealous in prosecuting a sexual assault, which had not in fact occured. Students were denied normal due process, and the presumption of innocence was violated. Penn State was under-zealous in prosecting a series of sexual assualts that actually did occur. The presumption of innocence was too strong, and they gave Sandusky the benefit of the doubt. What is the implication for universities? It cannot be either: 1. Be more aggressive or 2. Be less aggressive. Saying "Get it right!" is dumb. Of course Duke should have been less aggressive, and Penn State more aggressive. But there is no general lesson to be drawn here. Except perhaps that Stuart Taylor is not a very good statistician.

Holy Spumoli, what a mess. The Knicks have really screwed the pooch this time without any help from Zeke!

A lot of people are saying that the Knicks made the right decision to let Lin go. That is true I guess of the final decision they made, which was given that they had Jason Kidd and Raymond Felton under contract and Houston had backloaded Lin's offer in an inconvenient way, they chose to let Lin go.

However, the Knicks had to make a series of really stupid decisions to even get to that point.

First off, they didn't make any kind of offer to Lin on their own. They intentionally sent him out to test the market. During this process, They signed the wife-beating, drunk-driving, brick-laying geriatric Jason Kidd. They then signed the truly atrocious Raymond Felton.

Each of these decisions on their own and especially the three of them taken to together tell me that the Knicks were never very interested in bringing Lin back.

I mean Kidd & Felton? Really?

Kidd shot 36% from the floor last season and couldn't stay in front of a Galapagos tortoise on defense. Felton shot 40.7 percent last year and that is BASICALLY HIS CAREER AVERAGE SHOOTING PERCENTAGE!

Maybe there are some advanced metrics out there that would show Kidd & Felton to be awesome, but I don't think so. Lin might not be a great point guard, but he's better than those two put together (which isn't saying much).

I personally believe that Jeremy got D'Antoni'd by the same person who D'Antoni'd D'Antoni.

Wednesday, July 18, 2012

Now, the question: Suppose it is true that C is naive. One of the problems of being naive is not knowing the full extent and impact of one's naivete.

Now, suppose that we know that there are people like D, people who take advantage of naivete. D is capable of making bright shiny things, or complicated things, that will induce C to pay more than that thing is "worth."

Then, along comes B. B is a hand-wringer, the sort who really REALLY cares about other people. But B thinks B should get paid for caring about people, because he doesn't really care about other people THAT much, to work for free.
So, B proposes we create a government agency whose job it is to protect C from being taken advantage of by D.

Except that, to make this work, we will also have to tax A. A thinks C is an idiot, and that D is morally defective. But A would never buy D's product, and wonders why C would do it. After all, C should be able to figure it out, if he tried.

But, there it goes: We tax A to pay B to prevent C from being exploited by D.
Don asks, "Is this justified?" I think the right question is "When MIGHT it be justified." Still, Don asks a good question.

Again and again I see the economy's problem described along these lines:

"At the ZLB (zero lower bound), the real interest rate is too high to get us to the optimum. The nominal interest rate cannot fall any further by definition. So to get to the optimum the expected rate of inflation must rise."

Those are Simon Wren-Lewis' words (they appear in a comment at the link), but Krugman and many others tell roughly the same story.

As always, I have questions.

In the IS/LM framework many (not Wren-Lewis) are using, doesn't this mean that we are getting "growth" by firms investing in projects with a negative NPV now made profitable by an even more negative discount rate?

Second, how is that inflation expectations rise and the nominal interest rate remains unchanged?

From Fisher, we think of the nominal rate as the required real rate of return plus a premium to offset expected inflation. So it's hard for me at least to think about expected inflation doubling (from 1.5 to 3 percent) or tripling (from 1.5 to 4.5 percent) without the nominal rate rising. For that to happen the required real return would have to fall one for one with the rise in expected inflation.

Abstract:
Public engagement in pro-environmental behavior and support for
pro-environmental policy are essential for achieving sustainable living.
We propose that the “moral circle” is a common motivational source for
engagement in environmentally beneficial activities across situations
and may be thus drawn upon to efficiently promote these activities.
Study 1 established an association between chronic moral circle size and
nine pro-environmental activities from different domains. Via
experimental manipulation of the moral circle size, Studies 2a–d
demonstrated its causal effect on intentions to engage in
pro-environmental activities. Together, these studies offer an important
initial demonstration of the beneficial consequences of more expansive
moral circle in the domain of pro-environmentalism. Routes for expanding
the moral circle and thus promoting pro-environmental activities are
discussed.

Monday, July 16, 2012

If someone has profound amnesia, what are that person's political opinions? I know, it's tempting to say "Democrat," but let's be serious here. It's an interesting question about how political opinions are stored.

Jason Coronel et al.,
American Journal of Political Science, forthcoming

Abstract:
One of the most prominent claims to emerge from the field of public opinion
is that citizens can vote for candidates whose issue positions best reflect
their own beliefs even when they cannot remember previously learned stances
associated with the candidates. The current experiment provides a unique and
powerful examination of this claim by determining whether individuals with
profound amnesia, whose severe memory impairments prevent them from
remembering specific issue information associated with any particular
candidate, can vote for candidates whose issue positions come closest to
their own political views. We report here that amnesic patients, despite not
being able to remember any issue information, consistently voted for
candidates with favored political positions. Thus, sound voting decisions do
not require recall or recognition of previously learned associations between
candidates and their issue positions. This result supports a multiple memory
systems model of political decision making.

There are a lot of things that drive me crazy about the current practice of econometrics. People who think over-identification tests validate their indentifying assumptions. People who think that if you fail to reject the null at the 0.05 level, it's fine to proceed in your analysis as if the null was true (i.e. people who don't believe in type II error).

But one of the biggest is the practice of thinking we do no harm by using estimators we know to be inappropriate for the data at hand and thinking we somehow fully fix that issue by using robust standard errors.

I annually beat my head against the wall trying to get my students to appreciate these issues (only to often have my work undone by their reading papers/books that make these mistakes), but now on this last point, I have some help!